Gillespie et al v. Prestige Royal Liquors Corp. et al
Filing
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ORDER by Judge Haywood S. Gilliam, Jr. DENYING DEFENDANTS' 31 MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION AND IMPROPER VENUE. ( denying 48 Administrative Motion). (ndrS, COURT STAFF) (Filed on 10/3/2016)
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UNITED STATES DISTRICT COURT
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NORTHERN DISTRICT OF CALIFORNIA
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ELLIOTT GILLESPIE, et al.,
Case No. 16-cv-02392-HSG
Plaintiffs,
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v.
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PRESTIGE ROYAL LIQUORS CORP., et
al.,
Re: Dkt. Nos. 31, 48
Defendants.
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United States District Court
Northern District of California
ORDER DENYING DEFENDANTS'
MOTION TO DISMISS FOR LACK OF
PERSONAL JURISDICTION AND
IMPROPER VENUE
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Pending before the Court is a motion to dismiss Plaintiffs’ complaint for lack of personal
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jurisdiction and improper venue brought by Defendants Gabriel Sezanayev and Prestige Royal
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Liquors, Corp. (“PRL”). Dkt. No. 31 (“Mot.”). Having considered Defendants’ motion,
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Plaintiffs’ response, and all related papers, the Court finds the matter appropriate for decision
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without oral argument. See Civil L.R. 7-1(b). For the reasons articulated below, the motion is
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DENIED WITHOUT PREJUDICE.
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I.
BACKGROUND
This action arises out of a patent dispute regarding the design of a beverage container
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shaped like a solid bar of gold. On May 2, 2016, Plaintiffs Elliott Gillespie and Rockwood Spirits
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International (“Rockwood”) filed a complaint seeking (1) a declaration that Plaintiffs are not
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infringing Defendants’ design patents; (2) a declaration that Defendants’ patents are invalid and
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unenforceable; and (3) a finding that Defendants are infringing Plaintiffs’ design patents. See Dkt.
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No. 1 (“Compl.”).
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Plaintiff Gillespie resides in Canada and serves as president of Gold Bar Whiskey, a
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company that manufactures and sells alcoholic beverages. Id. ¶ 1. Gold Bar Whiskey has offices
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and a distillery located in San Francisco, CA. Id. Gillespie also serves as president and majority
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shareholder of Plaintiff Rockwood, a Canadian company with its principal place of business in
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Ottawa, Canada. Id. ¶ 2. Rockwood designs, manufactures, produces, and sells products. Id.
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Together, Plaintiffs manufacture and sell Gold Bar Whiskey, an award-winning whiskey sold in a
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gold-bar-shaped bottle. Id. ¶¶ 1-2. Gillespie filed a patent application for his bottle in July of
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2009, and was granted a design patent on August 16, 2011. Id. ¶ 22.
Defendant Sezanayev resides in New York and owns Defendant PRL, a corporation with
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its principal place of business in New York. Dkt. No. 31-1. Defendants sell beverages, including
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3 Kilos Vodka, which is also sold in a gold-bar-shaped glass bottle. Mot. at 3; Compl. ¶¶ 43-44.
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Sezanayev filed a patent application for his bottle in March of 2015, and was granted design
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patents in 2016. Mot. at 3.
United States District Court
Northern District of California
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On March 22, 2016, Plaintiffs’ Gold Bar Whiskey and Defendants’ 3 Kilos Vodka were
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displayed at the same trade show. Compl. ¶ 67. On April 1, 2016, Defendants sent Gillespie a
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cease and desist letter, alleging that Plaintiffs’ Gold Bar Whiskey infringed on Defendants’ design
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patents. Id. ¶¶ 58-60.
One month later, Plaintiffs filed the current action for patent infringement and a declaration
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that they are not infringing Defendants’ patents.
II.
DISCUSSION
On July 7, 2016, Defendants moved to dismiss Plaintiffs’ complaint under Federal Rule of
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Civil Procedure 12(b)(2) for lack of personal jurisdiction and under Federal Rule of Civil
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Procedure 12(b)(3) for improper venue. Mot. at 1. In the alternative, Defendants request an order
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transferring the action to the United States District Court for the Southern District of New York.
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Id.
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A.
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Federal Circuit law governs the personal jurisdiction analysis in an action “intimately
Rule 12(b)(2) Legal Standard
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related to patent law.” Breckenridge Pharm., Inc. v. Metabolite Labs., Inc., 444 F.3d 1356, 1361
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(Fed. Cir. 2006) (citing Silent Drive, Inc. v. Strong Indus., Inc., 326 F.3d 1194, 1201
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(Fed.Cir.2003)); Deprenyl Animal Health, Inc. v. Univ. of Toronto Innovations Found, 297 F.3d
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1343, 1348 (Fed. Cir. 2002) (“Federal Circuit law governs the issue of personal jurisdiction in [a]
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patent-related case.”). In analyzing personal jurisdiction, the Federal Circuit engages in a two-part
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inquiry: (1) whether the state’s long-arm statute authorizes service of process on the defendant
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and (2) whether the exercise of jurisdiction comports with due process. Celgard, LLC v. SK
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Innovation Co., 792 F.3d 1373, 1377 (Fed. Cir. 2015).
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Where a state, like California, “authorize[s] its courts to exercise jurisdiction over persons
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on any basis not inconsistent with . . . the Constitution of the United States,” see Walden v. Fiore,
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134 S. Ct. 1115, 1121 (2014), federal courts ask whether the exercise of jurisdiction over a
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defendant “comports with the limits imposed by federal due process,” Daimler, 134 S. Ct. at 753;
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Inamed Corp. v. Kuzmak, 249 F.3d 1356, 1360 (Fed. Cir. 2001) (“[B]ecause California’s long-arm
statute is coextensive with the limits of due process, the two inquiries collapse into a single
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United States District Court
Northern District of California
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inquiry: whether jurisdiction comports with due process.”); see also Cal. Civ. P. Code § 410.10
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(California’s long-arm statute is co-extensive with the federal due process clause). “Due process
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requires that the defendant have sufficient ‘minimum contacts with [the forum state] such that
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maintenance of the suit does not offend traditional notions of fair play and substantial justice.’”
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Celgard, LLC, 792 F.3d at 1377 (quoting Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)).
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There are two categories of personal jurisdiction a plaintiff can invoke: general and
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specific. Polar Electro Oy v. Suunto Oy, Case No. 2015-1930, 2016 WL 3913449, at *3 (Fed. Cir.
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July 20, 2016); LSI Indus. Inc. v. Hubbell Lighting, Inc., 232 F.3d 1369, 1375 (Fed. Cir. 2000).
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“Specific jurisdiction ‘arises out of’ or ‘relates to’ the cause of action even if those contacts are
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‘isolated and sporadic.’” LSI Indus. Inc., 232 F.3d at 1375 (quoting Burger King Corp. v.
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Rudzewicz, 471 U.S. 462, 472–73 (1985)). “General jurisdiction arises when a defendant
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maintains ‘continuous and systematic’ contacts with the forum state even when the cause of action
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has no relation to those contacts.” Id. (quoting Helicopteros Nacionales de Colombia, S.A. v.
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Hall, 466 U.S. 408, 414–16 (1984)).
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When analyzing specific personal jurisdiction, the Federal Circuit considers “(1) whether
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the defendant purposefully directed activities at residents of the forum; (2) whether the claim
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arises out of or relates to those activities; and (3) whether assertion of personal jurisdiction is
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reasonable and fair.” Polar Electro Oy, 2016 WL 3913449, at *3. “The first two prongs
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correspond to the ‘minimum contacts’ prong of the International Shoe analysis, and the third
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prong corresponds to the ‘fair play and substantial justice’ prong of the analysis.” Id. If a plaintiff
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carries its burden of establishing the first two prongs, the burden shifts to the defendant to prove
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that jurisdiction is unreasonable. Id.
When a district court’s determination of personal jurisdiction is based on affidavits and
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other written materials rather than an evidentiary hearing, the plaintiff bears the burden of making
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a prima facie showing of jurisdictional facts. Celgard, LLC, 792 F.3d at 1378. Under a prima
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facie standard, the court must resolve all factual disputes, including conflicts in affidavits, in the
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plaintiff’s favor. Polar Electro Oy, 2016 WL 3913449, at *3; Avocent Huntsville Corp. v. Aten
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Int’l Co., 552 F.3d 1324, 1329 (Fed. Cir. 2008).
However, courts are not required to determine jurisdiction on the papers alone. A district
United States District Court
Northern District of California
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court has “broad discretion” to permit or deny jurisdictional discovery. See Butcher’s Union
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Local No. 498 v. SDC Investment, Inc., 788 F.2d 535, 540 (9th Cir.1986) (trial court has “broad
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discretion to permit or deny discovery”).1 “Discovery should ordinarily be granted where
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‘pertinent facts bearing on the question of jurisdiction are controverted or where a more
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satisfactory showing of the facts is necessary.’” Butcher’s Union, 788 F.2d at 540 (citation
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omitted). The Ninth Circuit has reversed for abuse of discretion when further discovery “might
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well” have established a basis for personal jurisdiction. Harris Rutsky & Co. Ins. Servs., Inc. v.
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Bell & Clements Ltd., 328 F.3d 1122, 1135 (9th Cir. 2003). However, denial of jurisdictional
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discovery “is not an abuse of discretion when it is clear that further discovery would not
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demonstrate facts sufficient to constitute a basis for jurisdiction,” Wells Fargo & Co. v. Wells
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Fargo Express Co., 556 F.2d 406, 430 n.24 (9th Cir. 1977), or when the request is “based on little
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more than a hunch that it might yield jurisdictionally relevant facts,” Boschetto v. Hansing, 539
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F.3d 1011, 1020 (9th Cir. 2008).
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Because the issue of jurisdictional discovery is not unique to patent law, this Court looks to
Ninth Circuit, rather than Federal Circuit, precedent. See Patent Rights Prot. Grp., LLC v. Video
Gaming Techs., Inc., 603 F.3d 1364, 1371 (Fed. Cir. 2010); Autogenomics, Inc. v. Oxford Gene
Tech. Ltd., 566 F.3d 1012, 1021 (Fed. Cir. 2009).
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B.
Rule 12(b)(3) Legal Standard
28 U.S.C. § 1404(a) provides: “For the convenience of the parties and witnesses, in the
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interest of justice, a district court may transfer any civil action to any other district or division
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where it might have been brought.” The purpose of this statute is “to prevent the waste of time,
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energy and money and to protect litigants, witnesses and the public against unnecessary
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inconvenience and expense.” Van Dusen v. Barrack, 376 U.S. 612, 616 (1964).
“In patent cases, the law of the regional circuit applies when considering a § 1404 motion.”
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Eli Lilly & Co. v. Genentech, Inc., No. 13-CV-0919 YGR, 2013 U.S. Dist. LEXIS 114460, at *11
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(N.D. Cal. Aug. 13, 2013) (citing In re TS Tech USA Corp., 551 F.3d 1315, 1319 (Fed. Cir.
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2008)). The moving party first must show that the transferee forum is “one in which the action
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might have been brought.” Hoffman v. Blaski, 363 U.S. 335, 344 (1960). Subsequently, the
United States District Court
Northern District of California
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moving party must “demonstrate that a transfer of venue would promote the convenience of
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parties and witnesses and the interests of justice.” Kannar v. Alticor, Inc., No. C-08-5505 MMC,
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2009 WL 975426, at *1 (N.D. Cal. Apr. 9, 2009). At the second step, “the district court has
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discretion to adjudicate motions for transfer according to an individualized, case-by-case
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consideration of convenience and fairness.” Jones v. GNC Franchising, Inc., 211 F.3d 495, 498
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(9th Cir. 2000) (internal quotations omitted). The Court may consider:
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(1) the location where the relevant agreements were negotiated and
executed, (2) the state that is most familiar with the governing law,
(3) the plaintiff’s choice of forum, (4) the respective parties’
contacts with the forum, (5) the contacts relating to the plaintiff's
cause of action in the chosen forum, (6) the differences in the costs
of litigation in the two forums, (7) the availability of compulsory
process to compel attendance of unwilling non-party witnesses, and
(8) the ease of access to sources of proof.
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Id. at 498–99.
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C.
Analysis
In considering a challenge to both personal jurisdiction and venue, a court generally
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decides the issue of personal jurisdiction first. See Leroy v. Great W. United Corp., 443 U.S. 173,
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180 (1979) (“The question of personal jurisdiction, which goes to the court’s power to exercise
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control over the parties, is typically decided in advance of venue, which is primarily a matter of
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choosing a convenient forum.”). However, a court may address venue first where there is “sound
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prudential justification for doing so.” Id.
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Because the Court cannot determine at this stage whether there is “sound prudential
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justification” for first addressing venue, the Court begins its analysis with Defendants’ motion to
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dismiss for lack of personal jurisdiction.
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i.
Motion to Dismiss for Lack of Personal Jurisdiction
Plaintiffs assert that specific jurisdiction exists over Defendants because “the evidence
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reveals that [Defendants] are actively advertising, selling, and shipping the 3 Kilos Vodka in the
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infringing gold bottle throughout California.” Dkt. No. 42 (“Opp’n”) at 2. Unlike most
defendants who contest the Court’s exercise of personal jurisdiction, Defendants do not dispute
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United States District Court
Northern District of California
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that they currently advertise, sell, and ship the allegedly infringing products to California. See
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Dkt. No. 46 (“Reply”) at 3-9. Rather, Defendants assert that they did not have sufficient contacts
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with California to justify this Court’s exercise of personal jurisdiction at the time the complaint
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was filed on May 2, 2016. Id.
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a. Purposeful Direction
In analyzing the existence of specific personal jurisdiction, the Court first must determine
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whether Defendants “purposefully directed activities at residents of the forum.” See Polar Electro
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Oy, 2016 WL 3913449, at *3. The Court’s jurisdiction depends upon “the state of things at the
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time of the action brought.” Grupo Dataflux v. Atlas Glob. Grp., L.P., 541 U.S. 567, 570 (2004).
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Accordingly, the Court may only consider “contacts occurring prior to the event causing the
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litigation.” Farmers Ins. Exch. v. Portage La Prairie Mut. Ins. Co., 907 F.2d 911, 913 (9th Cir.
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1990); see also Grupo Dataflux, 541 U.S. at 570.
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While Plaintiffs have submitted two declarations and several exhibits as evidence that
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Defendants purposefully directed their infringing activities at California, see Dkt. Nos. 42-1, 42-2,
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42-3, 42-4, none of Plaintiffs’ evidence indicates that Defendants were engaged in such activity on
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or before May 2, 2016, when Plaintiffs commenced the current action. See id. For example,
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Plaintiffs have submitted the declaration of Donald J. Fritsch, a private investigator, who attests to
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Defendants’ sales and advertising conduct as of August 2, 2016, a full three months after Plaintiffs
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filed their complaint. See Dkt. No. 42-3; see also Compl. Similarly, all but two of the exhibits to
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the Catherine Hoffman declaration establish the Defendants’ efforts to advertise, sell, and ship 3
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Kilos Vodka to California after May 2, 2016. See Dkt. Nos. 42-1, 42-2.
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The only two exhibits that might reveal evidence of Defendants’ conduct at or before the
filing of the complaint are Exhibits 4 and 10 to the Hoffman declaration. See Dkt. No. 42-2.
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Exhibit 10 shows that 3 Kilos Vodka was available for purchase in California at some point in
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time, but there is no indication of when the screenshot was taken. See Dkt. 42-2, Ex. 10. Exhibit
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4, a social media post which purports to show a “satisfied customer” from “Cali,” is dated
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December 14, 2015. Dkt. No. 42-2, Ex. 1 at 26. While Exhibit 4 predates the filing of the current
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action, standing alone, it reveals nothing about how or where the purported customer obtained the
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United States District Court
Northern District of California
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bottle of 3 Kilos Vodka pictured. See id. The persuasive value of Exhibits 4 and 10 is particularly
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limited in light of the many exhibits illustrating Defendants’ conduct targeting California after
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May 2, 2016, see Dkt. 42-2, and Defendants’ declaration that 3 Kilos Vodka was first shipped to
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California on May 10, 2016, see Dkt. No. 46-1.
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Accordingly, the Court holds that Plaintiffs have failed to establish that Defendants
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purposefully directed activities at residents of California before the initiation of this action.
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b. Arising Out Of or Related To Such Conduct
The second prong of specific personal jurisdiction requires the Court to analyze whether
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Plaintiffs’ claim “arises out of or relates to” Defendants’ activities purposefully directed at
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California. See Polar Electro Oy, 2016 WL 3913449, at *3.
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Because Plaintiffs have failed to establish that Defendants purposefully directed activities
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at residents of California prior to the commencement of this action, Plaintiffs also cannot
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demonstrate that their claim arises out of or relates to activities directed at California.
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Consequently, as currently pled, Plaintiffs’ complaint also fails to satisfy the second prong of the
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specific jurisdiction test.
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c. Jurisdictional Discovery
However, the Court has broad discretion to permit jurisdictional discovery, which “should
ordinarily be granted where ‘pertinent facts bearing on the question of jurisdiction are
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controverted or where a more satisfactory showing of the facts is necessary.’” Butcher’s Union,
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788 F.2d at 540 (citation omitted). The Court may only deny jurisdictional discovery if “it is clear
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that further discovery would not demonstrate facts sufficient to constitute a basis for jurisdiction,”
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Wells Fargo & Co. v. Wells Fargo Express Co., 556 F.2d 406, 430 n.24 (9th Cir. 1977), or when
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the request is “based on little more than a hunch that it might yield jurisdictionally relevant facts,”
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Boschetto v. Hansing, 539 F.3d 1011, 1020 (9th Cir. 2008).
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The Court finds that jurisdictional discovery is warranted here. Although much of
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Plaintiffs’ evidence regarding Defendants’ advertising, selling, and shipping of 3 Kilos Vodka to
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California post-dates the filing of the complaint, none of the evidence precludes the discovery of
earlier acts by Defendants purposefully directed at this forum. Moreover, at a minimum, Exhibit 4
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United States District Court
Northern District of California
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to the Hoffman declaration is circumstantial evidence that Defendants advertised or sold the
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allegedly infringing product to California customers in late 2015. See Dkt. No. 42-2, Ex. 1 at 26,
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Ex. 4.
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Plaintiffs have demonstrated more than a “hunch” that discovery will reveal
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jurisdictionally relevant facts, see Boschetto, 539 F.3d at 1020, and the Court thus holds that
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jurisdictional discovery is appropriate. As such, the Court DENIES WITHOUT PREJUDICE
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Defendants’ motion to dismiss for lack of personal jurisdiction at this stage.
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ii.
Defendants also move to dismiss the complaint for improper venue, or in the alternative, to
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Motion to Dismiss for Improper Venue
transfer venue under Federal Rule of Civil Procedure 12(b)(3). Mot. at 11.
Because the Court has found above that jurisdictional discovery is warranted, the Court
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declines to reach the venue issue at this time. Accordingly, the Court DENIES WITHOUT
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PREJUDICE Defendants’ motion to dismiss for improper venue or to transfer venue.
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III.
For the foregoing reasons, the Court DENIES WITHOUT PREJUDICE Defendants’
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CONCLUSION
motion to dismiss for lack of personal jurisdiction and improper venue.2
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On September 1, 2016, Plaintiffs filed a motion for leave to file a sur-reply to Defendants’ reply
brief. Dkt. No. 48. Because the issue of personal jurisdiction will be resolved following
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The parties are directed to meet and confer regarding the appropriate scope and length of
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the jurisdictional discovery period, taking into account any discovery completed during the
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pendency of this motion. The parties are directed to submit a stipulation and proposed order
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detailing the scope and length of the jurisdictional discovery period no later than 14 days from the
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date of this order. If the parties cannot reach a stipulated agreement, the parties shall submit the
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dispute through a joint discovery letter brief filed in compliance with the Court’s standing order.
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The deadline to file a joint letter brief on the scope and length of jurisdictional discovery shall be
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no later than 21 days from the date of this order.
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United States District Court
Northern District of California
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IT IS SO ORDERED.
Dated: 10/3/2016
______________________________________
HAYWOOD S. GILLIAM, JR.
United States District Judge
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jurisdictional discovery and Plaintiffs will suffer no prejudice from the denial of a sur-reply, the
Court DENIES Plaintiffs’ request.
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